Gap between house prices and earnings narrows – but higher borrowing costs limit affordability gains
Published on: 02 October 2026 | 20 min read
- UK’s house price to income ratio falls from 7.6 to 7.3, an 11-year low, as earnings continue to outpace house price growth.
- For first-time buyers, homes now cost less than six times earnings, falling from 6.1 to 5.9.
- However, monthly mortgage costs have increased by £57 over the last year due to higher interest rates, while saving for a deposit remains a big hurdle for many buyers.
- Traditionally least affordable regions record some of the largest improvements in house price to income ratio, although London and the South East remain the most expensive places to buy.
- Scotland and northern England feature many of Britain's most affordable local authorities, led by Inverclyde and Aberdeen.
The average UK home now costs the equivalent of 7.3 times average earnings, down from 7.6 a year ago, according to new research from Lloyds, the UK's biggest mortgage lender. The ratio is now at its lowest level since 2015.
Nationally, the average property price increased by +0.5% over the last year, to £299,131, while average earnings rose by +4.5% to £40,790, narrowing the gap between average house prices and earnings.
However, while house prices have become more affordable compared to earnings, higher interest rates mean average monthly mortgage repayments have increased over the last year, rising from £1,100 to £1,157.
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